Medicaid
Managed Care Oversight Advisory Committee

Minutes
of the 12th Meeting

of the 2001 Interim

June
29, 2001

The 12th meeting of the Medicaid
Managed Care Oversight Advisory Committee was held on Friday, June 29, 2001, at 12:00 PM, in Room 129 of the Capitol Annex. Representative
Paul Bather, Co-Chair, called the meeting to order, and the secretary called
the roll.

Guests:† William Harned for AARP, Gay Fulkerson,
M.D., Mary R. Creekmore, R.N, Marybeth Crouch for Doral Dental, Cathy Allgood
Murphy for the Center for Accessible Living, Frances McGraw for the Department
for Medicaid Services; David T. OíNan for the American Cancer Society; Linda
Tobbe for Rural Metro Ambulance Services; Ann Gordon for the Cabinet for Health
Services; Bill Bowers for AstraZeneca; Bob Barnett for the American Pharmacy
Services Corporation; Gary Blalock for GlaxoWelcome; Bill Doll for the Kentucky
Medical Association; Cathy McGreher for Bayer; Peter Hasselbacker for the
University of Louisville; Mike Wooden for Schering; Lynn Chaffer for the
Department for Medicaid Services; Helane Miller for Abbott; Kelli Rodman for
the Commonwealth Group; Jan Gould for the Kentucky Retail Federation; Scott
Wegenast for the Catholic Conference; Fred Nesler, State Representative; Shawn
Crouch for CHA Health; Sarah Nicholson for the Kentucky Hospital Association;
Mike Porter for the Kentucky Dental Association; Rich Seckel for the Office of
Kentucky Legal Services; Patrick Padgett for the Kentucky Medical Association;
George Graham for Medicaid; Donovan Fornwalt for the Council on Mental
Retardation; and Anne Joseph for the Kentucky Task Force on Hunger.

The minutes of the May 31, 2001, meeting were approved
without objection.

The first item on the agenda was a presentation on the
Florida Medicaid Programís Disease Management and Cost Containment Initiative
by Maresa Corder, RN, MPA, Director, Disease Management Initiative, Florida
Agency for Health Care Administration. †Ms. Corder said that when the Florida
program was being put in place in 1997, there was a Medicaid Reform Task Force
established to seek areas for cost containment. The Task Force found that 10
percent of the population was using 90 percent of the Medicaid budget.† They
quickly studied the 10 percent group and found that chronic illness was the
main driver of the expenses. It was determined that disease management would be
considered, mainly because it prevents and delays the complications of chronic
health conditions.† Florida stratifies its recipients into three categories:
(1) high risk; (2) medium risk; and (3) low risk.† The risk category indicates
the risk of the recipient becoming a high-cost recipient.† Disease Management
was implemented to improve health outcomes.† Each contract has a component in
it to do universal outcomes, which are more fiscally driven outcomes.† They
also do disease state specific outcomes.† Their program is unique because it
has a multitude of components.† They not only focus on modifying the
recipientsí behavior, they also look at working with the providers, as well.†
It is the charge of each of their disease management organizations to provide
the physicians with the most current practice guidelines and to do profiling on
the physicians to make sure they are complying with the guidelines.† Their
patient satisfaction surveys are always high, which is attributed to recipients
appreciating the care management.† Providers are also supportive of the
program.† Next, she explained how the program was initiated.† She said they
developed invitations to negotiate, which gave them flexibility in negotiating
contracts for services.† She stated that they outsource all of the contracts.†
The invitation to negotiate was used because they found the request for
proposal methodology of procurement a little too rigid for a new program.†
Next, she reported on the method of payment.† She said they give the Disease
Management Organization a per-member, per-month administrative fee.† That
provides them with the operating capital for the project.† That fee is at 100
percent risk.† That makes them conscientious about staying on top of enrollment
and cost containment for the recipients.† At the end of the program, if there
is not a savings, they owe that amount.† A baseline year of claims is
established on patients.† At the end of the program, they run the intervention
year to see if there are savings in those claims.† Beginning in January, 2000,
contracts included a guaranteed savings clause.† Most contracts hold a 6.5
percent guarantee.

Representative Bather asked if the providers were based in
Florida, or if they are national in scope.† Ms. Corder said some of the
companies are national in scope and some are local.† She explained that they
look for someone who will have a presence in the state, because they have found
that to be vital.

Ms. Corder said that their outcome measures are designed to
look at hospital admissions, emergency room visits, length of stay,
re-hospitalization, prescription drug costs, patient knowledge, changes in
disease specific characteristics, patient satisfaction, and provider profiles.†
Most all of this is done from administrative data, particularly on the basis of
claims data.† She said each of the Disease Management Organizations are
required to report to them on a quarterly basis.† They hold shareholderís
meetings in order to determine their savings and whether or not they are on
target.

Representative Bather asked how the prior authorization
program worked, and whether it was outsourced, or in-house.† Ms. Corder replied
that it is in-house.† The pharmacists call the Medicaid office to receive prior
approval.† They are given a number and are allowed to fill the prescription.†
There is an outsourcing of the major programs.

Senator Mongiardo asked if they are looking at the health
care outcomes of the patients, or just the cost savings.† Ms. Corder said they
are absolutely looking at the health care outcomes of the patients.

Representative Bather asked how often the companies are
monitoring the patients.† Ms. Corder said it depends on the stratification
level.† If they are in a high risk stratification, it can be daily.† The
different time schedules are included in the contracts.

Representative Nunn said Kentucky is projecting a $280
million shortfall in Medicaid next year, and Florida is projecting a $1.2
billion deficit next year.† He asked what is driving Floridaís Medicaid budget
to have a significant shortfall.† Ms. Corder said it is because the program had
been expanded. †She continued to explain that the Florida Kid Care Program has
been greatly expanded.† She also noted that the Florida legislature took $4
million from the Disease Management Program prior to the first year of the
program.† The next year, they took $40 million from the program.† Now they are
at a $67 million deficit before the implementation of the contract. The Florida
legislature is going to restore some of the funds to the Disease Management
Program.

Ms. Corder said they got the word out to providers by using
Medicaid bulletin articles, press releases, monthly trainings, presentations,
and letters.† She reported that goals for the future include: (1) expanding
programs statewide; (2) increasing cost savings through guaranteed savings in
contracts; (3) improving in the patientsí quality of life; and† (4) using
patient medical self management.† The lessons they have learned include: (1)
importance of selecting companies that have disease management as their primary
product; (2) importance of a companyís in-state presence; (3) importance of
systemic or populations based disease management; (4) elaborate shared savings
arrangement can diminish actual savings; and (5) Demand Management will enhance
savings.

Senator Mongiardo said it sounds as if Florida is moving
many of the functions of managed care HMOs out into the field to develop a high
touch system where the patient and the physician are educated.† Recently, a lot
has been heard about the Patientsí Bill of Rights.† He asked if any problems
have been noticed with patients having access to care because access has been
limited through care management and, if so, if any lawsuits have been filed.†
Ms. Corder said that no lawsuits have been filed and, in fact, accessibility
has been increased.† It has afforded a more humane process of not letting
people languish in their disparity.† Recipients have a relationship with
someone who can help get them into the system.

Next, Ms. Corder discussed pharmacy savings.† She reported
that they have saved $243 million so far through some programs that they were
able to institute.† She stated that the following things were put into place:
(1) turned off the early refill override; (2) instituted a thirty-day fill
limit; (3) instituted a Therapeutic Consultation Program of a four brand limit;
(4) instituted benefits management for high utilizers; and (5) began academic
detailing to prescribers.

Ms. Corder reported that some of the legislative initiatives
that recently transpired in Florida include the following: (1) development of a
formulary; (2) prior authorization for GI drugs; (3) prior authorization for
Oxandrin, Megace, Synagis, etc.; (4) pharmacy consulting; (5) expansion of
benefits management for high cost recipients; (6) management of recipients with
20+ drugs in 180 days; (7) drug management for Dade/Broward County HIV/AIDS
cases; and (8) prior authorization of 4+ brand drugs for nursing home
patients.† Next, Ms. Corder explained the supplemental rebate program by saying
that it (1) assures pharmaceutical manufacturers of an opportunity to present
evidence supporting inclusion of their products on the formulary; and (2)
authorizes the agency to negotiate rebates from manufacturers in addition to
those required by Title XIX of the Social Security Act.† Ms. Corder explained
that the agreement to pay the minimum supplemental rebate will ensure
consideration of the product for preferred drug formulary inclusion; however,
she noted that placement is not guaranteed.† She reported that there are no
upper limits on the supplemental rates the agency may negotiate.† Agency
decisions will be made on the basis of clinical efficacy, safety, and
cost-effectiveness.† The agency is authorized to contract for rebate
negotiation services.† She concluded by saying that supplemental rebate offers
may include cash rebates and other program benefits as long as guaranteed
savings to the Medicaid program occur in the same year the rebate reduction is
included in the General Appropriations Act.

Senator Mongiardo asked what amount Florida pays for
pharmaceuticals per year.† Ms. Corder did not know that number. Senator
Mongiardo asked if she knew the average extra savings gained by going to a
formulary over the federal rebate.† Ms. Corder did not have that information,
but said she could get it.

Representative Bruce asked if the Florida Medical
Association was consulted when the program was started.† Ms. Corder said it was
and that they worked closely with each other throughout the process.

The next item on the agenda was testimony from providers, consumers
and other interested citizens relating to Medicaid.† First, William Harned,
volunteer with AARP, reported that AARP is especially worried that the caps and
cuts on the Home and Community Based Waiver will do damage in an area where new
thinking about the way we care for the disabled and the frail elderly is taking
shape.† He noted that Kentucky spends the lionís share of its Medicaid
long-term care budget on institutional services instead of on home and
community based services.† He suggested that a cap or cut in this comparatively
small portion will do little to help the shortfall while imposing a
constriction of services where the need is growing and new concepts hold
promise for the future.† Many advocates for disabled persons and the frail elderly
will be proposing that the state of Kentucky consider the adoption of patient
directed services.† This plan provides a person who is eligible for Medicaid
services in a nursing home with a voucher or credit which could be spent to
hire the help needed to stay in a personís own home rather than in a nursing
home.† The HCFA has allowed a waiver for this approach, and at least four
states have set up programs to study the process and the results which, to this
point, appear promising.† Three additional states are preparing their own
programs, and we think Kentucky should join these leaders.† This concept gives
people control over their own care and a choice about how they will live.†
Ultimately, this approach may prove more cost-effective than institutional care
in many cases.† Kentucky can and should, embrace the principle that older and
disabled Kentuckians deserve appropriate long-term care of the highest quality
in the least restrictive environment.† As leaders, we can champion that idea by
protecting the Home and Community Based Waiver and adoption of the Independent
Choices Waiver.

Senator Mongiardo asked if Mr. Harned was aware of the
states in which this is implemented and if it saved money for the state as far
as keeping patients at home versus in nursing homes was concerned.† Mr. Harned
said the process is an ongoing one.† Arkansas has been at this for just about a
year now, so it is way too early to tell.† Florida has two groups; they have
the group in the Standard Medicaid Services Program and this other group.† They
are comparing all aspects of the program, including cost, quality of care, and
outcome.

Senator Mongiardo asked if Mr. Harned knew the cost
differential of a patient deciding to stay at home and hire somebody to help
versus staying in a nursing home.† Mr. Harned said that the intent is that it
not be more.† The way the program is set up in Arkansas, for example, the
intent is that it not cost more.† The vouchers and credits that patients
receive are for the same amount that would have been used for their other care.

Senator Mongiardo asked if Mr. Harned is aware of any abuse
of the system in which patients who are not planning to go to a nursing home
receive funds to stay at home.† Mr. Harned said none have been reported yet,
but that is one of the things that is going to be evaluated.

Next, Rita Harned, who has worked in the home health setting
as well as in hospitals said she has observed elderly patients in nursing
homes. She noted that they become more confused because they are out of their
realm and out of their homes.† When they are in the nursing home, they are in a
completely different environment in which they have no voice about what they
would like done.† If there is any way that these people can be taken care of in
their homes, that is the better realm for them.† They remain more themselves
and are less confused.† The persons coming into their homes are like family
members.

Next, Gay Fulkerson, M.D., Family Practitioner from
Leitchfield, discussed some of her frustrations with the Medicaid program.† One
problem she has is that some days she tends to spend more time on paperwork
than actually taking care of patients.† She is in Region 3, and most of her
patients receive Medicare and either Medicaid or Passport.† She has some patients
whom she sees on a fee-for-service basis.† She reported that a big problem for
her is that some of her patients have been flipped on a month-by-month basis
between Medicaid and Passport as their payer source.† She said another
important issue is to empower patients to take charge of their own health
care.† If patients can be given incentives to help their health conditions,
Kentucky would see a great cost savings.

Senator Mongiardo asked what incentives she had in mind.†
Dr. Fulkerson said she has tried many things, without much success.† She said
she was interested in what was working in Florida as incentives.

Dr. Fulkerson went on to say that what would help her would
be if there were a better way to coordinate the patientsí care.† She also said
that psychiatric services are very limited in rural Kentucky.

Senator Mongiardo said the Medicaid Managed Care Oversight
Advisory Committee is looking at expanding KenPac, in which all patients will
be under a primary care physician.† He asked how that would impact Dr.
Fulkersonís practice.† Dr. Fulkerson said there will be enough physicians to
provide that care in her area.

Representative Bather asked Ellen Hesson, Interim
Commissioner of the Department for Medicaid Services, to speak to Dr.
Fulkersonís concern about some of her patients being flipped from Passport to
regular Medicaid on a monthly basis.† Ms. Hesson said that this is the first
provider complaint of this nature and that she is committed to dealing with
those problems.

Next, Mary Creekmore, RN, a long-term care administrator,
appeared before the committee as a consumer and a provider.† First, as a
consumer, she shared with the members the story of her six-year-old grandchild,
who is suffering from muscular dystrophy.† She stated that her granddaughter is
a Medicaid recipient because of the high cost of her care.† Three years ago,
they began having nursing coverage at home.† Now they are using their second
home health service, because the first one could not provide the help.† Their
service could stop any day, which would mean the childís mother would have to
be with her 24 hours a day.† She voiced the concern that there may not be
enough providers for Kentucky to institute community based services.† She asked
the members to look at putting the money with the patient.† She stressed that
it would be very beneficial if there were one person the family could go to who
would guide the familyís health care.† As it is now, the family has no
direction and is constantly bumped around.

Next, she talked about nursing home care.† She said there is
a place in Kentucky for all levels of nursing homes.† She noted that the
nursing homes need to be kept in mind in the waiver based system, because they
provide a good service.† The personal care homes are a less restrictive area,
but they do have some problems.† They are not able to upgrade their building or
do things for residents.

Senator Mongiardo asked what the difference is between
assisted living, personal care homes, and nursing homes.† Ms. Creekmore said
assisted living is the lightest care.† Those residents must be able to take
their own medication and are up and about; it is a nice environment.† This
costs about $1000 a month.† The next step up is personal care, where the
residents are a little more fragile, but are able to get around.† Their
medications are passed out to them.† The next level is a high level of care;
the patients are immobile or in bed most of the time and require a lot of care
as far as personal needs are concerned.† The highest level is the skilled
level, where the patients have intravenous catheters and they require more
intensive care.

Next, Kathy Allgood-Murphy from the Center for Accessible
Living stated that Kentuckyís budget shortfall in the Medicaid program must be
addressed with a balanced and open-minded approach.† Input from the public and
private sector is a valuable asset to the Governorís Special Task Force on the
Medicaid budget crisis.† To date, input appears to be limited to discussions
with those entities most able to bring financial assistance in the form of
Intergovernmental Transfers.† If answers to this crisis are to be found, the
Governorís Task Force must actively seek public input from all concerned.† She
said that previous administrations have failed to act on important
opportunities to take advantage of the flexibility offered by the federal
government.† Despite much public and legislative interest in simply studying
this option, Kentuckyís Medicaid program elected not to seek federal dollars
set aside for feasibility studies.† States had the option of applying for up to
$500,000 in grants that did not require state matching dollars to study the
issues.† Again, Kentucky failed to even study the possibility of expanding
Medicaid coverage to working individuals with disabilities.† She requested that
the Governorís Task Force be open to soliciting public input as it seeks
solutions to the crisis of the shortfall.† It is possible that persons and
organizations delivering services may have important cost-saving ideas to bring
to the discussion.† She continued by saying that the Center for Accessible
Living wants to be a part of the solution and can offer an important
perspective to developing long-term strategies.† As with any crisis, it
presents both dangers and opportunities.† Kentucky has a new opportunity to
analyze its present Medicaid system and develop a more efficient,
cost-effective, and quality program for thousands of Kentuckians who depend on
the Medicaid program.† Finding viable long-term solutions must become the
highest priority for the state.† Kentuckians deserve the chance to contribute
to finding solutions to these issues.† Individuals and organizations working on
the front lines delivering services to Medicaid deserve the opportunity to
participate in this process.† She said the Center for Accessible Living will
not have all the answers, but they can share their experiences and offer
insight in finding the best solution to the crisis.† She closed her
presentation by saying that one way of bringing a great deal of money to the
Medicaid program would be to raise the cigarette tax and put that money into
Medicaid.

Senator Mongiardo asked Ms. Allgood-Murphy to give future
testimony as to what it takes to take care of a patient, from beginning to end,
through all the different programs available, and as to how the programs can be
set up so that patients are taken care of in the best, most cost-effective
manner possible.

Next, Jane Chiles from the Catholic Conference said that in
February, a coalition was pulled together to preserve Medicaid; this includes a
number of consumer advocates, as well as providers to the Medicaid program.†
Since then, they have been working to educate themselves regarding the critical
issues.† She thinks it is important to recognize that the shortfall and the
funding crisis has gone beyond the question of how the deficit will be made
up.† It has caused people to step back and see it as an opportunity to build a
better product.† She ended by saying that how the Medicaid problem is treated
will be a key for measuring how much Kentucky values its people.

The next meeting of the Medicaid Managed Care Oversight
Advisory Committee is scheduled for Friday, July 27, 2001, at 12:00 PM, at the
Hazard Appalachian Regional Medical Center Conference Room.